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Budget 12: VCT and EIS annual investment limit changed to £5m

The annual investment limit for a VCT and EIS investing in a qualifying company has been revised down to £5m, after it was announced in last year’s Budget that it would be increased to £10m.

In last year’s Budget statement, Chancellor George Osborne announced the Government would raise the annual limit for qualifying investment companies by 400 per cent to £10m for both vehicles.

Hargreaves Lansdown investment manager Ben Yearsley says: “You have to remember where the investment limit is coming from. It was being increased from £1m to £10m. £5m is a still very workable amount for  a VCT manager to work with.”

The Government also reiterated its stance revealed in the Autumn Statement to introduce a disqualifying purpose test to exclude companies set up for the purpose of accessing relief, bar EIS  and VCTs from investing in some feed-in tariff businesses and a qualifying company from acquiring shares in another company.

The statement said: “For both EIS and VCTs the Government will also introduce a new disqualifying purpose test to exclude companies set up for the purpose of accessing relief, exclude acquisition of shares by a qualifying company in another company and exclude investment in some Feed-in Tariff businesses.”

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